CAPITAL BOOKS - Recovery & Restructuring
CAPITAL BOOKS - Chartered Accountants & Insolvency Practitioners
 
Our philosophy is that every client is different and have an absolutely different requirement.
 
Our experts consider every client's requirements by understanding the situation and then provide an excellent service tailored according to their specific requirements.
 
We establish a one-to-one relationship with every client and therefore we are able to offer timely, individual advice on how to improve businesses and personal finances.
 
We have developed the traditional bookkeeping and accounting services into futuristic client-focused services that provide not only all the reliable background support you would expect from a professional firm but also relevant advice on how to improve your situation.
 
Whether you need help with growing your business or advice on optimising your personal or family finances, we are here to help you get the best results.
 
We provide advice on formal and informal insolvency procedures available to the following clients who are facing financial difficulty: 
 
  • Companies
  • Individuals
  • Partnerships businesses
 
 
It is directors statutory duty to seek professional advice from a licenced insolvency practitioner once they consider that the company may not be able to avoid insolvency, in order to assess and discuss not just the company’s position but also that of each director.
 
On realising the company is insolvent, or may shortly be in such a state, the directors’ duty of care moves from the shareholders to the creditors and there are personal consequences arising relating to wrongful trading, preferences and transactions at an undervalue.
 
 
An administration is a court procedure placing a company or partnership that is, or may become, insolvent under the control of an administrator following an application by the company, its directors, partners, a creditor or a secured creditor with a floating charge.
 
The objectives of an administration are either
 
  1. the rescue of the company as a going concern, or
  2. achieving a more advantageous realization of assets for the benefit of creditors than would be likely in liquidation, or
  3. to enable payment to the secured or preferential creditors.
 
The objectives are listed in the order they must be considered by the administrator and must always take into account the interests of all the company’s creditors.
 
 
 
 
 
A CVA is a procedure that allows an insolvent company to reach an agreement with its creditors to delay or compromise the payment of its debts.
 
The directors has to consider that the business is a viable and profitable business prior to considering a CVA procedure.
 
Creditors will usually agree to support a CVA where it can be shown they will achieve a better outcome than if the company was liquidated and the business and assets sold.
 
The crucial factor in rescuing a business and protecting creditors' rights is the early involvement of specialists.
 
 
This is a situation where the directors of the company have concluded that the company is insolvent and that after considering all other alternative insolvency procedures it has no option but to go into liquidation.
 
Formal meetings of the shareholders and the creditors are convened where at the shareholders meeting resolutions are passed to place the company into liquidation and appoint a liquidator.
 
At the subsequently held creditors meeting the creditors have the deciding say on the individual(s) appointed as liquidator(s) who may or may not be the same as nominated by the shareholders.
 
 
 
 
This is a procedure where a solvent company is able to formally end the trading life of the company, leaving no loose ends and possibly provide a tax efficient exit route for shareholders.
 
The procedure requires the directors of the company to sign a declaration of solvency, the veracity of which the directors must be absolutely certain about as if it subsequently transpires that the company was insolvent the directors may then face imprisonment and/or fines by virtue of having sworn the declaration.
 
 
A compulsory liquidation is initiated by a creditor owed at least £750 (as currently prescribed) who petitions the Court to formally wind up the company that owes the money.
 
On the making of the winding up order one of the Official Receivers is appointed liquidator pending a meeting of the company’s creditors and contributories convened to consider appointing a liquidator in place of the Official Receiver.
 
The primary duty of the liquidator is to maximise realisations so as to minimise losses to creditors and shareholders.
 
Liquidation is a terminal solution followed by the dissolution of the company.
 
 
 
There are three main types of receivers;
 
  1. Administrative receivers,
  2. LPA receivers and
  3. Fixed charge receivers
 
  • With certain exceptions, administrative receivers may only be appointed by holders of a debenture executed before 15 September 2003. It offers the opportunity for a company to continue trading whilst searching for a buyer for all or some of the business assets and also provides the opportunity to retain company personnel during this time. The primary task of the administrative receiver is to realise the assets of the company for the benefit of the charge-holder.
 
  • In an LPA (Law of Property Act) receivership the receiver is appointed by the mortgagee to deal with a specific property, e.g. to receive income until such time as the asset is sold. The receiver has no responsibility for the other assets of the company which remain under the control of the directors.
 
  • Here the appointment is usually by a bank with a fixed charge over the company’s book debts and the receiver is empowered solely to deal with those debts for the benefit of the appointing bank. The company’s other assets remain the responsibility of the directors.
 
 
 
 
If your business be under performing and demands on your cash flow getting to the point where there is a real threat that everything will spiral out of your control, it is vital that you seek early specialist advice on options that may be available to revitalise your business such as new funding, investment or restructuring.
 
These and other options form part of the turnaround routes considered on our assessment of your position with a view to restoring your company to a healthy situation to include forecasting assessments to reassure any potential investors/stakeholders as to future profitability.
 
 
 
It may be that an offer to compromise an individual’s debts may be capable of being made on an informal basis but that creditors would prefer for such an offer to be sourced via a professional firm so as to feel more secure about the viability of the offer.
 
 
This involves a rescheduling of an individual’s debts in a manner similar to such as may be considered by either a deed of arrangement or an IVA.
 
However, it is not necessarily supervised by a regulated professional and is not legally binding on any creditor.
 
Where the debt is relatively small, a scheme such as this may be the best option.
 
 
Not a commonly used procedure, under certain circumstances, may be more beneficial to an individual and his creditors than either debt management or a voluntary arrangement.
 
Basically, an individual forwards to his creditors through a licensed insolvency practitioner an offer in settlement of his debts. The offer is submitted in the form of a deed and requires a majority in value to accept it for it to take effect. It is more appropriate where there are few creditors and there has already been an agreement provisionally approved. However, it is legally binding only on all approving creditors.
 
 
The procedure is available to individuals who has debt less than £15,000, no assets and low disposable income.
 
The government designated agencies submit your application to the Official Receiver and the OR will make an Order.
 
DRO will be for 1 year.    
 
 
The most popular alternative to bankruptcy.
 
It is a formal contract between an individual and his or her creditors whereby the creditors agree to accept a reduced offer (usually) in full and final settlement of their debt.
 
Once approved, it is binding on all creditors irrespective of whether that individual creditor had voted to reject the offer. It is flexible in nature and is therefore capable to being tailored to address an individual’s personal circumstances.
 
 
There are instance where bankruptcy is the best option for an individual.
 
Bankruptcy frees an individual from all debts in existence at the date of the bankruptcy order and the majority of individuals will be automatically discharged from bankruptcy 12 months or earlier from the date the Order was made.
 
A Trustee is appointed to deal with the bankruptcy estate to ensure that asset realisations are maximised and realisations properly applied to the benefit of creditors.
 
A bankruptcy order may be petitioned for by the individual himself/herself or by a creditor with a debt in excess of £750.
 
 
 
 
 
A partnership may also be subject to an Administration Order.
 
The Administrator may be appointed by order of the court, by the holder of an agricultural floating charge or by the members of the partnership. The provisions of Schedule B1 and Schedule 1 to the Insolvency Act apply as with ordinary limited companies with modifications.
 
However, the purposes of an administration order remain the same as discussed under corporate insolvency herein.
 
 
A partnership other than a limited liability partnership may be wound up as an unregistered company.
 
The limited liability partnership is subject to the same winding up procedures as a limited company.
 
The winding up provisions as set out in the Insolvency Act as applicable are modified by the Insolvent Partnerships Order 1994.
 
There are several differing winding up scenarios such as:
 
  1. a petition presented against the partnership by a creditor with no concurrent petition(s) against member(s);
  2. with concurrent petition(s) against member(s); or by a member again with or without a petition against individual members.
 
Additionally, where a partnership is being wound as an unregistered company provision is made within the Insolvent Partnership Order for specified provisions of the Company Directors Disqualification Act 1986 to apply.
 
There is no provision to voluntarily wind up a partnership.
 
 
This concept is governed by the Insolvent Partnerships Order 1994 and applies the CVA provisions laid out in the Insolvency Act 1986, albeit with certain modifications.
 
The proposal for a PVA may be made by the members of the partnership other than in cases with existing insolvency procedures in place in which instance the proposal may be made by the Administrator, Liquidator or Trustee as may be relevant.
 
If the PVA is approved at the specifically convened meetings of the members and creditors considering the proposal it has the effect of binding the creditors to the terms of that proposal as regards the partnership but does not affect a creditor’s rights as against the individual members of the partnership. Therefore, if the PVA is not likely to settle creditors’ claims in full it may be necessary for the individual members to consider protecting themselves by proposing a CVA or an IVA, depending on the status of the member.
 
 
Capital Books is a trading name of Capital Books (UK) Limited
Company No. 07057648
 
Capital Books, 66 Earl Street, Madstone, Kent, ME14 1PS Tel: 01622 753 501
Fax: 01622 321 000 Mob No. 07809 217 232 E-mail: mail@capital-books.co.uk
 
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